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02.CHOICE CEO Message

Consumer advocates are often seen as an irritation.

We're the groups that make suggestions that business hates − ideas that will increase transparency, make it easier for consumers to avoid being ripped off, and ensure strong sanctions when businesses break the law.

There's sometimes a tendency in government to see consumer interests in the same way. Around 12 months ago, as we faced the start of the 2014 parliamentary year, it looked like that was going to be the predominant view. The federal government had committed to a Red Tape Reduction agenda to take a knife to ‘unnecessary and costly' regulation.

On its face, that's not unreasonable. Regulation that is genuinely unnecessary should be repealed, because it adds to the costs of goods and services for consumers.

But whether you see a piece of regulation as red tape or good consumer protection is often a matter of perspective. And if the prevailing view is that regulation = red tape = bad, then the interests of businesses will inevitably be treated as more important than the interests of consumers.

While that was the way that 2014 started, it wasn't the way it ended. By Christmas, it felt like the pendulum had swung back towards consumers − at least in the eyes of some important decision-makers.

The two clearest signs came late in 2014.

The first was when the Senate voted to reinstate important consumer protections in the financial advice system. This put to bed a debate that had dominated 2014 and at many points looked like it had been lost to industry interests. In the end, the evidence was irrefutable: consumers had lost millions of dollars as the result of shonky advice and the system needed to be strengthened to reduce the risk of future disasters.

The second sign was the report of the government's Financial System Inquiry. This was a process that many had feared would favour the big end of town. The chair of the inquiry, David Murray, was a former CEO of the Commonwealth Bank, and the other members of the panel were all drawn from business backgrounds.

These fears proved unfounded, with the inquiry recommending stronger obligations for financial institutions, and stronger protections for consumers right across the system − from the design of new financial products through to how they're sold to and used by consumers.

There seems to be a stronger recognition that effective consumer protection is important to a well-functioning economy − that when we get it wrong, it's bad not only for individual consumers who encounter problems, but for the economy as a whole.

And this is how consumers should be seen − not as a hindrance to the economic activity but as its ultimate beneficiaries.

The definitive test of economic policy should be whether it's serving the interest of consumers.